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Here you will find answers to the questions most frequently asked about credit and debit cards.

Credit Cards

Debit Cards

My credit card issuer/bank held up a transaction I was making abroad why would they do this?

Your card company is probably using fraud-detection software that checks for unusual spending patterns on its customers' cards. If you don't normally use the card abroad the software will spot this and your transaction may be held up while the card company makes checks to see if the suspect transaction is genuine or not. If it isn't, an immediate block can be put on the card, stopping a fraudster from using it further.

Some card companies like their customers to advise them if they are going to be using their cards abroad. Whether you do this or not you should always keep a note of your card company's 24-hour contact number with you in case you need to speak to them in an emergency

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If I pay with my credit card and the product is defective, is the credit card card company in any way liable?

In situations like this the customer should first of all complain to the retailer involved. If the dispute is not resolved, however, and the customer has paid between 100 and 30,000 for the product using a credit card, then Section 75 of the Consumer Credit Act applies. This means that the card company has equal liability and you can get your money back from them. This would also apply in a situation where the company involved goes bankrupt and no goods are received.

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If my credit card is stolen and used within the EU, am I liable for any of the bill or is it paid for by the credit card provider?

The most you will ever have to pay if you are the innocent victim of card fraud is £50. In practice, most banks refund you with the full amount. However, if your card issuer can show that you have acted fraudulently or without reasonable care, you may be liable for all losses on the card. A common example of acting without reasonable care is writing down your PIN and storing it with your card.

A full explanation of liability for losses can be found in sections 12.11 and 12.12 of The Banking Code.

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What are the official rules and regulations regarding transaction fees on credit card payments?

Credit agreements in general are regulated by the Consumer Credit Act 1974. Fees for various transactions on credit cards, such as cash withdrawals, are competitively priced by each card issuer and you should refer to your terms and conditions to find out exactly what those charges are.

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With chip and PIN, who is liable for card fraud?

With the introduction of chip and PIN there is no change in liability for the cardholder. Consumers remain fully protected from the cost of card fraud and are covered under The Banking Code. From 1 January 2005 there was a shift in liability for some types of card fraud from banks to retailers, but this will not affect cardholders in any way.

If businesses have chip and PIN terminals in store, they are covered for the cost of card fraud whether customers enter their PIN or their signature, just so long as staff follow the on-screen prompts and carry out the routine checks to ensure cards have not already been reported lost or stolen.

Banks will continue to be liable for the cost of card fraud committed on old-style non-chip and PIN cards, so by accepting them businesses are not putting themselves at risk in any way

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Why is it more expensive to withdraw cash on a credit card than it is to make a regular retail purchase?

You can use a credit card to withdraw cash at an ATM, over a branch counter, or at a Bureau de Change. There is usually a handling charge for each withdrawal, typically a small percentage of the amount withdrawn (e.g. 2.5%, though this is usually subject to a minimum amount of, say, around £2.50). This is because by taking cash you are accessing the direct line of credit rather than going via a third party, such as a retailer, who would usually pay the card issuer for the credit service.

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When I make a debit card transaction, does the money leave my account straight away? When does the money reach the retailer?

A debit card transaction will usually be debited from your account on the following working day. However, if the amount of the transaction is above the floor limit of that retailer, the card issuer will earmark the funds on your account at the time the transaction is made. The time it takes for the money to reach the retailer is dependent upon the terms of the contract with their merchant acquirer (bank).

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Can I be charged a handling fee by retailers when I use my debit card?

You should be aware that if you buy foreign currency or travellers cheques using your debit card it may be treated like a cash transaction so your bank may charge you. If they do, as with all competitive charges, it will be outlined in your terms and conditions. The travel exchange bureau/provider may also charge you for using your debit card but this should always be made clear to you up front.

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When I use my debit card for a payment do I have the same consumer protection as when I use my credit card?

Your protection is greater if you use a credit card and the transaction is for an amount between £100 and £30,000. This is because the credit card issuer is jointly liable under Section 75 of the Consumer Credit Act if the goods received are faulty or if they are not received at all, e.g. if the company goes out of business. In these circumstances the credit cardholder will be able to get their money back from their card issuer but the debit cardholder probably wouldn't.

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